Are Netflix ratings irrelevant?

We ask whether there's value for advertisers in knowing SVOD audience stats, if they are to be measured by Nielsen.

Pilot episodes tend to be “clunky” – there are a lot of new characters to introduce, and the audience has to be brought up to speed on the plot, Ted Sarandos said last week.

So if the first few installments of a series don’t attract the kind of audience numbers a network expects, should the show be deemed a failure? Netflix’s chief content officer doesn’t think so.

“Ratings measurement has been bad for the creative of television,” Sarandos told the audience at an investors’ conference last week where he spoke about the network’s 5-year plan. Sarandos added that while Nielsen numbers may be necessary for the business of television, where networks are selling advertising and jockeying for channel position with the cable operators, “It’s an irrelevant measure of success for us.”

But is it really fair to say there is no business value in publicly releasing viewership numbers on SVOD services? Last month it was revealed that Nielsen will start measuring SVOD viewership rates on the streaming service and its rival, Amazon, in order to give additional insight to studios and networks into the value of their syndicated content. Nielsen hasn’t confirmed how its package would function, but when asked about the product, Sarandos quipped: “I hope you have all the confidence in that number that you have in Nielsen’s current tracking.”

Broadcasting execs sometimes claim that OTT platforms and catch-up viewing on TV Everywhere platforms drive audiences to watch series currently on air. So if there’s a correlation between linear and OTT viewing, perhaps there is value in advertisers knowing what audiences are watching on Netflix, even if they can’t buy ad space there.

However, Rob Young, SVP director of insights and analytics at media buying agency PHD in Toronto, doesn’t think there would be any way for the broadcasting networks to leverage this information when making deals with advertisers.

“[The networks] are certainly not going to go out to the advertising community and say, ‘Hey, good news! Our audience numbers are down by 10% because Netflix is running this show.’ And anyway, we already know their numbers are down by 10% because we got the overnights. I already want 10% of my money back.”

He does, however, think the information could help the networks determine the impact – or lack thereof – of Netflix viewing on linear-TV demographics.

“If you had Netflix’s average minute audience data, and you have the average minute audience data for the linear television channel or program, you could run the 2 lines together and see if there is a correlation between one going up, and the other going down, which would suggest causality. I guess [it could] clue you in a little more as to why there might be deterioration in audience numbers on linear television,” he says.

But while that may have an impact on how to license content to SVOD services down the road, it’s not of much practical value to the advertising community, he says.

“Internally, I would take that information and I would talk to my licensing department and I would say, ‘Maybe we should rethink about whether we license this property to Netflix because it’s having a negative impact on my own audience numbers, which I’m selling to advertisers for less money because my numbers are lower,'” he says.

Like Sarandos implied in his talk, Netflix’s straight-to-series production model takes pressure away from producers to deliver sky-high ratings right off the bat. However, as stakeholders, those producers and talent don’t even have access to viewership data, which could affect their ability to bargain licensing deals after their Netflix run is over.

In contrast to Netflix, Canadian streaming service Shomi will make viewership data available to its content partners, Marni Shulman, senior director, content & programming at Rogers Media, said at a TIFF conference this fall.

Don Carmody is producing an original series for both platforms – a youth-skewing drama called Between that will stream on Netflix internationally and on the Rogers-owned OTT platform in the Canadian market.

Carmody questions whether third-party analytics would be able to deliver accurate viewership statistics that producers could then leverage.

“Netflix already knows how many times a program is accessed on their platform and they make programming decisions based on that data – same with iTunes and Amazon,” he says. “Their data will be far more reliable and exact than a Nielsen sampling of a limited number of viewers filling out diaries or through set-top boxes.”

“Many millennials access [OTT] services on their cell phones and laptops, and not their TV sets. I sincerely doubt Nielsen will even be able to find them to record their participation, in any case,” Carmody says.